Runs, transparency and regulationOn the optimal design of stablecoin frameworks

Stablecoin issuers can become subject to runs just like banks. This is because, in the absence of adequate regulation, issuers are incentivised to hold disproportionate amounts of high–yielding but illiquid assets in their reserve portfolios. The value of such reserve assets may be overly volatile, thus inducing investors to suddenly redeem their stablecoins. To mitigate the risk of runs, recent

Source: op.europa.eu